Sri Lanka Involvement in Debt Restructuring, Benefits to China = US Treasury Secretary | Reuters

US Treasury Secretary Janet Yellen emphasized on July 14 that China is Sri Lanka’s “significant creditor” and that any involvement in Sri Lanka’s debt restructuring would benefit both parties. Representative photo taken in Bali, Indonesia on the same day (2022 Reuters)

[Nusadore (Indonesia) 14th Reuters]-US Treasury Secretary Janet Yellen emphasized on the 14th that China is a “significant creditor” of Sri Lanka and that it would be beneficial for both sides to be involved in Sri Lanka’s debt restructuring. He met locally in Bali, Indonesia on the 15th before the G20 Finance Ministers and Central Bank Governors’ Meeting, which opened in Bali, Indonesia.

Mr Yellen said he would encourage other G20 members to cooperate with China over debt restructuring in developing countries, including Sri Lanka.

Sri Lanka has borrowed at least $ 5 billion from China, with some estimates doubling its debt. According to the International Monetary Fund (IMF), India has lent $ 3.8 billion, Japan has at least $ 3.5 billion, and other developed countries have lent a total of $ 1 billion to Sri Lanka.

“It’s clear that Sri Lanka will not be able to repay this debt, and I hope China will actively work with each other on Sri Lanka’s debt restructuring,” Yellen said.

In October 2020, the G20 and the Paris Club (Major Creditors Conference) adopted a “common framework” for debt relief so that developing countries with large debts could survive the pandemic of the new coronavirus, and Zambia has already adopted it. , Ethiopia, and Chad are requesting assistance under this framework. However, support has not progressed since China, which is the world’s largest creditor, and private creditors are reluctant to get involved.

Yellen pointed out that the global economy has deteriorated since Russia’s invasion of Ukraine and many developing countries have been forced into more difficult economic conditions. This is one of the important messages I am trying to emphasize at this G20 conference. ” He explained that his main purpose was to encourage China and other G20 creditors to settle the debt restructuring issue for developing countries in need.

In addition, Mr Yelen said the US government will contribute $ 70 million to the IMF’s “Poverty Reduction and Growth Trust” to give the IMF more room to continue its zero-interest lending to the poorest countries.

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